SkyscraperCity banner
1 - 20 of 47 Posts

·
Registered
Joined
·
2,681 Posts
Discussion Starter · #1 ·
Canada's labour advantage gone

By GREG KEENAN

Friday, May 27, 2005 Updated at 4:12 AM EDT

From Friday's Globe and Mail

A vaunted Canadian advantage in labour costs at vehicle assembly plants has evaporated and turned into a cost penalty that threatens to soar, according to data in a DaimlerChrysler Canada Inc. document assessing the auto maker's competitive situation.

DaimlerChrysler Canada's assembly plants are operating at a disadvantage of $8.81 (U.S.) an hour, compared with U.S. plants operated by the three largest Japan-based auto makers, company data show. Labour costs are $51.05 an hour in U.S. dollars at Canadian plants versus an estimated $42.24 at Honda, Nissan and Toyota plants and compare with an advantage Canada held from 1998 to 2002.

"Our Canadian labour costs, including time off, health care and wages have been rising 5.8 per cent annually for a decade," DaimlerChrysler Canada spokesman Stuart Schorr said yesterday.

"For Canada to maintain or grow its auto export industry, the manufacturers and CAW have a shared responsibility to keep labour costs from growing even more uncompetitive."

The North American market now has six strong competitors battling it out in every segment.

The DaimlerChrysler information suggests coming labour negotiations between the Canadian Auto Workers union and the three Detroit-based auto makers will focus more than ever on major restraints in wages and other benefits.

The labour talks kick off in July and will conclude this fall.

Jim Stanford, CAW economist, said the labour cost numbers make sense to him, but pointed out that unionized Canadian plants have lower costs than similar operations in the United States.

The DaimlerChrysler data confirm that, showing estimated hourly labour costs of $60 at U.S. plants last year, giving Canada a $9 an hour advantage on U.S. plants represented by the United Auto Workers.

"They've zeroed in on this one comparison [with Japan-based companies] that I think is relevant, but doesn't tell the whole story," Mr. Stanford said.

"When you look at the whole picture, including labour costs, productivity and quality, Canadian plants are still competitive."

While not commenting on the DaimlerChrysler data, General Motors of Canada Ltd. president Michael Grimaldi agreed that Canadian operations need to focus on costs.

"This cost-competitiveness issue is a global issue," Mr. Grimaldi said yesterday after addressing The Globe and Mail's editorial board in Toronto. "This isn't competitiveness north and south of the border," he said.

Soaring U.S. health care costs, for example, are seen only as an issue there, but they're rising in Canada as well, even with Canada's taxpayer-financed health care system. "We are an integrated company," he said. "Opportunities and problems in the U.S. are Canada's opportunities and problems as well."

Mr. Stanford noted, however, that the increase in the value of the Canadian dollar has made a major impact on Canada's competitive position.

"The fundamental reason the Canadian advantage ended after 2002 is because the dollar went from a 63-cent average that year to 80 cents today," he said. "There's nothing we can do about that."

The comparison between Canadian unionized plants and U.S. plants operated by the three largest Japan-based auto makers highlights a critical element hovering over the talks between the Big Three and the CAW.

That is the tectonic shift in North America over the past several years that has turned the vast middle of the market into a combat zone dominated by the Detroit three and the Japan three, but with Hyundai Motor Co. of South Korea lusting to join in.

The minivan segment, a market DaimlerChrysler dominated in the 1990s and one that contributed to gaudy profits that decade, illustrates how competitive the market has become.

DaimlerChrysler makes minivans in Windsor, Ont., that go up against minivans made by Ford in Oakville, Ont., GM in Georgia, Honda in Alabama, Toyota in Kentucky and Nissan in Mississippi.

The average wage for CAW members assembling minivans in Windsor was $51.05 (U.S.) last year and it took 27.43 hours on average to put one vehicle together, DaimlerChrysler data show. That gave the Windsor plant a labour cost of $1,400 for each minivan.

Honda, by contrast, paid $42.24 an hour to workers at its minivan plant in Lincoln, Ala., and it used 22 hours to assemble one vehicle. That put Honda's labour cost at $929 for each minivan, a $471 advantage over Chrysler.

The amount of time off that workers get in Canada virtually wipes out the advantage of taxpayer-financed health care, said industry analyst Felix Pilorusso.

For example, CAW members with 20 years of service are entitled to 451 hours a year away from the job in the form of vacations and other time off. That's the equivalent of 11 40-hour weeks. The comparable figures for Toyota Motor Manufacturing Canada Inc. are 408 hours, while UAW members at U.S. plants receive 334 hours of time off or about eight weeks.

Workers at Honda Motor Co. Ltd., Nissan Motor Co. Ltd. and Toyota Motor Corp. U.S. plants receive a maximum of 288 hours or seven weeks.
 

·
Registered
Joined
·
436 Posts
Not too surprising really. Firstly you have the rising dollar which is probably the biggest factor to consider here. Secondly you have out of control unions. It's one thing to demand rights for your workers, it's another thing to put the company that ensures those rights out of business.
 

·
Mr. Haney(Cruz) for Pres.
Joined
·
2,644 Posts
The Toyota plant in Cambridge is non-union, and I believe the Honda plant in Allison is too.
 

·
Registered
Joined
·
436 Posts
^Well, if you're game we could argue about the pros and cons of unions to spice up this thread.

lol...just an idea.
 

·
Mr. Haney(Cruz) for Pres.
Joined
·
2,644 Posts
My nephew works at the Toyota plant in Cambridge and makes very good money.

There was a time - decades ago - when unions were really needed. Today, in most cases, their benefit to the average worker is dubious IMO.
 

·
partybits
Joined
·
1,451 Posts
The Cdn $ will be falling down by 2006. It's not that our dollar is high, it's the US$ is low, and when they pick up, we will see our dollar go back down into the 70's range. So, I think it's fairly temporary.
 

·
Registered
Joined
·
2,681 Posts
Discussion Starter · #8 · (Edited)

·
Registered
Joined
·
436 Posts
oceanmdx said:
My nephew works at the Toyota plant in Cambridge and makes very good money.

There was a time - decades ago - when unions were really needed. Today, in most cases, their benefit to the average worker is dubious IMO.
Well we can't argue about if we agree on our opinion now can we ?! :) lol
 

·
www.mtlurb.com
Joined
·
2,159 Posts
partybits said:
The Cdn $ will be falling down by 2006. It's not that our dollar is high, it's the US$ is low, and when they pick up, we will see our dollar go back down into the 70's range. So, I think it's fairly temporary.

I think to the contrary, if you think the US dollar is weak now, you have seen nothing yet.

It will free fall if the US govt cannot control its spendings and rampant deficit.

Foreign investors and lenders are very patient now, when they'll get enough of these defecits, they'll retire their monies.

The US won't be the only ones in shit, we'll feel it too. (anyone sees a 1$ to 1$) in the next 2-5 years?
 

·
Registered
Joined
·
303 Posts
I tend to agree with you on that Malek. I think the US dollar is going to continue to drop. Until the federal government in the US gets its act together regarding its deficit.
 

·
partybits
Joined
·
1,451 Posts
crap, i'm the devils advocate....oh well here we go!
I think the US$ WILL stablize. For one, the US$ has historically been overvalued and finally in the last couple yrs has fallen back to realistic levels.
Second, many of the issues that caused the selling pressure are temporary in nature (2-5yrs)
-The deficit was caused primarily by the war. This will most likely (i don't have a crystal ball though...don't critisize too much) end shortly after the next elections. OR...at least the most costly portion of it.
-The trade deficit (which is the true selling pressure of the US%, not the actual deficit as most believe) should be greatly reduced as China is forced to unlink the Yuan against the US$.
-Oil prices, assuming they fall or at least moderate, should place less pressure against the US$.

As for the deficit, while it is the largest $$ wise in US history, it is by far not the largest as a %of GDP which was achieved during the 70's/80's.

As for the US economy, they are to set to explode. The economy has been undervalued for far too long, and when it does finally come out of it's rut, they will have such an expansion, there will be a run on the dollar pushing it back up to more respectful levels.

This economic 101 lesson has been brought to you by Sesame Street and the letter, ummm...G.
 

·
Registered
Joined
·
5,767 Posts
The USD is over-valued, and has been for a long time. And every year, there is less and less reason to keep it propped up as a global currency. But the future is impossible to predict all the same...Chine...the Euro...hell, even gold could affect things in any number of ways.

Canada unfortunetely, is just along for the ride...let's hope the Cdn$ falls to the USD whatever happens.






"Well, if you're game we could argue about the pros and cons of unions to spice up this thread. "

Unless you have something new that hasn't been debated a zillion times. You favour the right of the corp to exploit the worker, because you think it benifits "someone" in general, while I think both sides having some teeth makes for some rough rides...but an even playing table in the end.







KGB
 

·
Moderator
Joined
·
10,393 Posts
Even if this is true, the folks at Toyota don't seem to be aware of it:

http://news.yahoo.com/s/nm/20050530...ZCyBhIF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl

Toyota to build plant in Canada - Nikkei

TOKYO (Reuters) -
Toyota Motor Corp. plans to build another plant in Canada, its seventh in North America, to produce 100,000 to 150,000 subcompact cars a year by as early as 2008, the Nihon Keizai Shimbun daily reported on Monday.
ADVERTISEMENT

Japan's largest auto maker plans to spend about 50 billion yen ($463 million) to build the plant near its existing Canadian facility in the province of Ontario, the newspaper said.

Toyota had considered building the plant in the United States but selected Canada because of lower labor costs, it said.

By the time the plant begins operations, Toyota's total manufacturing capacity in North America will have increased to about 2.5 million units a year, about 1 million more than in 2004, the financial paper said.

The company's ratio of North American to total output will rise to almost 30 percent from 20 percent now, the report said.

Meanwhile, Toyota has started investigating suitable sites in the United States or Mexico for its eighth North American plant, which it plans to start building by 2010, the report said.
 

·
Banned
Joined
·
229 Posts
If the separatists have another referendum, the CDN dollar will fall at least 5 cents
and interests rates will rise two percentage points. This will happen before the vote.
 

·
Registered
Joined
·
436 Posts
KGB said:
You favour the right of the corp to exploit the worker, because you think it benifits "someone" in general, while I think both sides having some teeth makes for some rough rides...but an even playing table in the end.
No, I favour people not being out of work because of overzealous unions holding companies hostage. Otherwise we agree.
 

·
Mr. Haney(Cruz) for Pres.
Joined
·
2,644 Posts
Toyota will be building another plant in Canada which will be non-union.

A number of years ago, the demands of the UAW cost Windsor a Chrysler engine plant.
 

·
Mr. Haney(Cruz) for Pres.
Joined
·
2,644 Posts
I think all the Japanese auto plants are non-union.
 

·
Registered
Joined
·
5,767 Posts
"No, I favour people not being out of work because of overzealous unions holding companies hostage. "


Taking any side based on worse-case scenarios is not an arguement...and thinking there is a mythical harmonious solution to labour and management is not one either. Overzealousness will always be a factor of either side. Which is why we must accept the limitations of either as just par for the course.

I've never heard an arguement against organized labour that made any sense....all alternatives are worse.






KGB
 
1 - 20 of 47 Posts
Top